Small Market, But Now Growing

Incomes low outside formal employment Prices: higher than neighbours, 10% of food expenditure But market for beef now growing 5%-7%, Dairy c. 10% p.a. But constraint in Lusaka.

Driven by:

higher urban incomes, urbanisation changing lifestyles, changing food consumption patterns

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3 Systems: Motives, Opportunities & Constraints

Cattle Population (000)

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Farmer Type Traditional Emergent Commercial

Calving rate 30%-50% in-btn 70%-80%

Calving mortality 30%-40% in-btn 1%-2%

Adult deaths 5%-10% Lower Lowest

Off-take rates 8%-9% 10%-15% 17%-18%

Live Weight 200-250 250 300

Milk yields 1-2 ltrs 8-10 ltrs 17-23 ltrs

Characteristic Low growth Dynamic Dynamic

Input Costs Undermine Competitiveness

Feed, drugs and medicine costs higher than RSA

(feed+15%)

Poor access to vet services – govt, private

Fuel costs high, power expensive (self generated)

No rail, expensive road transport: Three times RSA

Finance inaccessible (collateral, short term) &

expensive (spreads)

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Immature Industry Still Evolving

Beef: Competition Limited But Growing

• Market power lies with industry

• Few independent abattoirs, no formal wholesale market for beef.

• Focus on capturing value, not efficiency.

• Market concentration, integration are barriers to entry.

• Weak supply linkages with farmers.

BUT growing market, reasonable returns are attracting investment

• Competition increasing: dominant players losing market share, new entrants will exert competitive pressure.

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Dairy: Competition Limited But Better Linkages

• Market power with industry.

• Dominant processor – 50% market share,

• Growing power of supermarkets = Large remain dominant

But growing market, good returns causing better business models + investment

• Major processor: collection centres, helps trace diseases.

• Emerging farmers = 10% of market & increasing.

• New producer dairies and cooperative dairies are being established.

• Interest from large foreign companies but surplus capacity.

• Still need investment in supply chains

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Ministry Ambitious Plans – Consensus?

• Disease free zones, Vet & Ext Services, livestock centres, research and breeding. New Acts.

• Disease free zone: Disadvantage main production areas? Policing?

• Meat and Dairy boards. Old problems?

• Sustained political will?

• Choice: Government driven Vs Public Private Partnership

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What Could The Industry Look Like

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Scenario 1: Business as Usual

• Population growth 2-3% p.a.: 4 provinces

• Industry growth = 2-3% above GDP.

• Uncompetitive, so opportunistic exports

• Limited job creation

• Off take rates low

• Traditional, small scale farmers may not escape

poverty

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Scenario 2: Major Industry in a Decade

• Population grows 5% p.a. & spreads to other provinces

• Industry growth 4-5% above GDP.

• Exporter to region, emerging on world stage

• Investment = job creation (Kenya = 700,000 dairy jobs)

• Emergent farmers lead output growth

• More traditional farmers become emergent

• Traditional, small scale farmers escape poverty.

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What Needs To Happen?

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More Competitive Inputs Available

1. Diseases are controlled - govt. prevents (economic diseases), targets hot-spots- farmers prevent (management diseases)- efficient private sector supply of vet services & drugs- quarantine facilities enable exports

2. Breeding services improve - Govt research and breeding - Private AI services

3. Feed improves - farmer fodder banks, legumes, range management

- feed companies support cheaper solutions

4. Extension services spread good practice- govt. services - private companies

govt. Services

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More Competitive Inputs Available

5. Transport & Fuel costs fall - lower tax on fuel for agric. & transport – green diesel

- duties and taxes on spares- skills- finance for fleet

6. Access to Affordable Finance Increases - short & longer term for transition & emergent farmers - innovative products (i.e. Livestock, machinery collateral) - better business plans, loan supervision - affordable long term finance for processors

7. Power is available and cheaper in rural areas- less outages- off-grid solutions, renewable

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Farmers Maximise Opportunity

Traditional farmers: increase off take security from drought, disease better extension = adopting good practice commercial incentives increase: supply chains, market centres

Emergent farmers : increase productivity access to short and long term finance improved private sector supply of extension, training better integration in supply chains

Commercial farmers : invest, improve competiveness cost of inputs falls, cheaper finance access to infrastructure improves cost of doing business falls lower X – rate volatility

Emergent farmer is key to faster growth and competitiveness

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Efficiency Increases, Value Addition

Beef • Increased investment in feed lots + attractive exports• Specialised businesses, wholesale market for beef, • Bigger, better utilised, abattoirs, • Lower transport, power costs• Access to finance • Quarantine facilities for exports

Dairy• Investing in supply chains, higher capacity utilisation• Investing in market development (i.e. School milk)• Business development services for producer and coop dairies• Product diversification• Reducing Non Tariff Barriers

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Policy & Institutions Improve

Policies & Institutions are sustainable and sustained • policy contradictions reconciled • co-ordination between ministries improved• political interference, handouts fall

Effective public private partnership develops • clear roles • PPP for disease prevention, vet & extension services,

Govt. Institutions are more effective• service oriented • better managed

Investment climate improves• input costs fall• cost of permits, licenses falls

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The Prize: Major Industry in a Decade

• Population grows 5% p.a. & spreads to other provinces

• Industry growth 4-5% above GDP.

• Exporter to region, emerging on world stage

• Investment = job creation (Kenya = 700,000 dairy jobs)

• Emergent farmers lead output growth

• More traditional farmers become emergent

• Traditional, small scale farmers escape poverty.

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Way Forward? Over to You

Thank You18